A letter to Indiana's next governor

July 30, 2011|By PHIL TROYER

Below is the Indiana Policy Review's condensed version of its 2012 "Open Letter to the Next Governor," which outlines issues and policies likely to be on a governor's desk as the new term begins. -- Editor

Dear Governor ( ): Indiana has certainly outperformed many other states during the economic downturn but the recession still had a profound impact on Hoosiers.

In January of 2008, Indiana's unemployment rate stood at just 4.6 percent. (It was only 3.2 percent in January of 2001.) By March of 2009, that rate had jumped to more than 10 percent and remained in double digits for 17 months.

While the percentage of unemployed Hoosiers has continued to tick downward throughout 2011, it remains significantly higher than in many states.

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Furthermore, Indiana's median household income, which had been right at the national average in 1999, dropped almost 10 percent below that average by 2009. Not surprisingly, therefore, the number of Hoosiers living in households below the poverty line jumped from 8.7 percent in 1999 to 14.4 percent in 2009.

All considered, nobody can say the state's economy is in as good a shape as a decade ago.

And the rosy numbers used to tout our state budget surplus necessarily ignore our massively underfunded state employee pension funds.

What may come as a surprise is that, while Indiana suffered a net decrease in private sector jobs from 2001 to 2011, appropriations for economic development projects increased by more than 150 percent over that same period of time -- from approximately $790 million to more than $3 billion.

The root causes of the prior fiscal imbalance were left unaddressed. In fact, had it not been for Indiana's receipt of federal stimulus funds and your predecessor's refusal to spend money that had been appropriated by the General Assembly, Indiana would have faced a multi-billion deficit over the past two years. In point of fact, state government grew substantially in real terms during the past 20 years, which poses several problems for your administration. The most obvious is the pressure the cost of these new programs will place on Hoosier taxpayers and the negative effect any attempt to offset future funding deficits though higher taxes will have on economic growth.

An equally important byproduct is the growing separation between state government and the public it is supposed to serve.

As state government becomes more complex, it becomes more difficult for Hoosier voters to evaluate how their elected officials are performing.

History demonstrates that unchecked governmental agencies are often a breeding ground for sloth and soft corruption. The budget crises faced by many states as a result of the Great Recession exposed shocking examples of a disparity between the benefits received by civil servants and the public they serve. This imbalance would not have been possible without the incestuous relationship between public officials who grant these generous benefits and public-sector unions who keep them in power through generous campaign contributions. Your administration must decide whether to confront this powerful coalition.

Finally, you must find a way to grow our economy and return Hoosiers to the status of "full employment" they enjoyed not that many years ago. Not only would an increase in the state's employment rate help relieve current budgetary pressures by bolstering revenues and decreasing the need for government programs, it would enable the next generation to find work here after graduation, thus strengthening the Hoosier family, the bedrock of our state.